*Business Structures & management Flashcards
Defina sole proprietorship
Sole proprietorship is a business started, owned, and operated by one individual.
The owner and the business are considered the same. The business has no existence without the owner. The involvement and reputation of the owner directly affect the business, making these types of businesses hard to sell.
Define Fiduciary Responsibility
Fiduciary responsibility is “to act in the best interests of another person or entity
What is General Partnership?
When two or more people join to create a general partnership, these people alone share in the profits and risks of the business.
General Partners are personally liable in lawsuits or for other legal claims.
What is a limited partnership?
Someone besides the working partners has invested in the business.
Partners have the same legal responsibilities as members of a general partnership. But a limited partner can NOT participate in the firm’s management and is liable only up to the amount of their investment.
What is a limited liability partnership?
This type of partnership is generally limited to licensed professionals such as accountants, lawyers, architects, physicians, and engineers.
The owners of an LLP have limited liability rather than blanket liability as in a general partnership. And each partner can participate in managing the business, unlike the limited partner.
What is a limited liability company?
The limited liability company (LLC) is a hybrid of the general partnership or sole proprietorship and the corporation.
Because state statutes define the structure, this organizational form must be considered based on local laws.
Owners are called “members,” and those who manage the business are called managers.
A member has no personal liability even if the company is sued or faces large debt. The business itself faces these liability issues, not the members personally.
What are the two ways you can structure your LLC?
1.) a partnership or sole proprietorship
2.) a corporation
What is a corporation?
A corporation is an association of individuals created according to statutory law. It is a separate legal entity.
A corporation is the most time-consuming and expensive method of forming a business.
A corporation is legally and financially separate and distinct from its originating or ownership members. These members are called stockholders or shareholders.
Define a joint venture
Two or more persons or firms agree temporarily to share a particular project or business venture’s responsibilities, losses, and profits.
The key to the joint venture is its temporary status
Define professional liability insurance
Protects the designer if some action by the designer causes bodily injury or property damage.
It is also called malpractice insurance or errors and omissions insurance. This covers problems resulting from incorrect specifications, mistakes on drawings, and incorrect installation of furniture.
Defin general liability insurance
This includes a range of insurance to protect against claims of property damage, liability, and personal injury
It may also include product liability insurance. This provides protection if a product or installation completed by the designer or a subcontractor causes damage or injury to the client.
Define property insurance
Protects the designer’s building and its contents against disasters such as fire, theft, and flood, even if the designer rents space.
Define Personal injury protection insurance
Protects the interior designer against charges of slander, libel, defamation of character, misrepresentation, and other torts.
What is a tort?
A tort is a civil wrong (as contrasted with a criminal act) that causes injury.
What is studio organization?
Each studio is responsible for completing an entire project, from initial planning to production and construction administration. The advantages of studio organization include close and immediate communication among members of the design team and the synergy that comes from sharing ideas and group problem solving.
